Brazil says U.S. tariffs and quotas unjust, still open to negotiate

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BRASILIA (Reuters) - The Brazilian government said U.S. quotas and tariffs that went into effect on Friday on Brazil’s steel and aluminum exports to the United States were unjustified, but said it remains open to negotiate a solution that benefits industries in both countries.

Under the new quota-based system agreed to by Brazil’s steel industry, the country’s exports of steel to the United States are to fall by around a fifth, dealing a blow to a key sector already grappling with widespread idle capacity and excessive global supply.

The Brazilian aluminum industry opted for the tariff rather than agreeing to a quota, and its export to the United States will face a 10 percent surcharge on current tariffs.

President Donald Trump said tariffs were imposed on national security grounds, but he has also railed about wanting to protect U.S. industry and workers from what he calls unfair international competition.

The United States announced on Thursday that it was ending a two-month exemption and moving ahead with tariffs that will hit its allies Canada, Mexico and the European Union besides Brazil.

Brazil has argued that the quotas and tariffs will also hurt U.S. industries that import its steel and aluminum and importers will face higher costs.

“The Brazilian government considers that the restrictions on Brazilian exports are not justified and continues to be open to a solution that best serves the expectations and needs of the steel and aluminum sectors in Brazil and the United States,” Brazil’s Foreign Ministry said in a statement.

Brazilian semi-finished steel exports to the United States will be subject to quotas based on the average for the three years from 2015-217, while finished steel products will be limited to a quota of 70 percent the average for those years.